Federal Student Update: One Big Beautiful Bill Act (OBBBA)

In July of 2025, the One Big Beautiful Bill Act (OBBBA) was implemented leading to significant changes to several Federal Student Aid programs.While there have been no changes to the 2025-2026 federal aid programs, the changes impacting the 2026-2027 award years and beyond will go into effect on July 1st, 2026. UMBC has been closely monitoring these updates and we intend to continue to relay important information to our student body as we become aware of updates.

Changes to Federal Student Aid

Undergraduate students: Federal Pell Grant and Federal Direct Loans

  • Part time loan proration: UMBC will be required to prorate annual loan amounts based on student enrollment. If you plan to enroll in 11 credits or less, anticipate a reduction in your federal loan funds offered.
  • Pell Grant ineligibility: Students who receive awards from non-federal sources that cover their entire cost of attendance are ineligibe to receive a Pell Grant, even if they are eligible for the program.

Graduate and Professional Students: Graduate PLUS loan program and new loan limits

  • Part time loan proration: UMBC will be required to prorate annual loan amounts based on student enrollment. If you plan to enroll in 8 credits or less, anticipate a reduction in your federal loan funds offered.
  • The Graduate PLUS loan program has been eliminated, effective July 1st, 2026.
    • If a borrower has a Federal Direct Loan made before July 1 2026, while enrolled in a program of study, the student may continue to borrow from the program for three academic years or for the remainder of their program. If the remainder of the program is longer than three years, the student will be limited to the three year legacy provision period.
  • Unsubsidized loan limits have been capped at $20,500 for graduate students and $50,000 for professional students. Combined loan limits have been capped at $100,000 for graduate students and $200,000 for professional students. These totals do not include loans that were borrowed during the student’s undergraduate period.

Parent Borrowers:

  • Effective July 1st, 2026, Parent Plus Loan borrowers will be limited to $20,000 per dependent student per academic year. Combined limits have been set in place for Parent plus loans in the amount of $65,000. (Please note, this does not include amounts forgiven, repaid, canceled, or discharged.) Parents and students should begin financially planning for funding gaps that may be created as a result of  the loan changes. Legacy provisions apply.

Loan Repayment: 

Loans made on or after July 1, 2026 may only be repaid using two plans: A new Standard Repayment Plan or the new income based repayment plan, called the Repayment Assistance Plan or RAP.

  • Standard Repayment Plan:  New standard repayment plan with four fixed terms of 10, 15,20, or 25 years based on the amount the student has borrowed.
  • Repayment Assiatance Plan: This new income based repayment plan requires a $10 minimum payment witth monthly payments being 1-10% of income based on the student’s Adjusted Gross Income or AGI. There is no cap on the monthly repayment plan amount.

 

We know that changes like these can incur questions about funding your education. Below are some anticipated questions and answers that may clear up any questions that you have about the changes as a result of this legislation.

The Legacy provision or “grandfather clause” in terms of Federal Loan policy implies that you are able to borrow on the eligibility requirements that you initially agreed to. The changes to the Federal borrowing programs that are effective July 1st, 2026 will not impact loans borrowed and disbursed prior to July 1st, 2026. Please note that the legacy provision does not apply to new transfer students.

The changes implemented in this bill will not impact loans that were borrowed prior to July 1st, 2026. Students and parents may continue to borrow under the terms that they initially agreed to prior to the start of the 2026-2027 academic year.

  • For example, if you are an undergraduate student enrolled in six credits for Spring, 2026, your loans will not be prorated. You will be eligible for the full amount.
  • Your Graduate Plus loan for 2025-2026 and before, will not be canceled or changed due to the elimination of the program.
  • Parent plus loan limits will not be enforced for any academic year before 2026-2027.
Students and families who are considering options beyond Federal borrowing may consider alternative loans. UMBC’s preferred lender list gives families options to reduce confusion, and assist borrowers and their families in making financially informed decisions.

This webpage is intended to inform UMBC students and affiliates about relevant changes to federal student aid. The information shared here is for educational purposes and should not be considered the primary source. We encourage you to regularly visit the Federal Student Aid website for official updates, announcements, and resources from the federal government. More information is currently in development. For more information on changes as a result of this legislation, the National Association of Student Financial Aid Administrators (NASFAA) has developed a web center that tracks all the changes and implementation of the One Big Beautiful Bill Act.